When Buffett names the single most important idea in investing, he defers to his teacher: Benjamin Graham's three words, "margin of safety." The discipline is simple but unforgiving - buy only when the price sits comfortably below your estimate of value, so that errors, bad luck, and the market's mood can be absorbed without permanent loss. These passages trace how Buffett returns to that cornerstone again and again, whether insisting on it at the point of purchase or warning that a cheery consensus has quietly eroded it.
We insist on a margin of safety in our purchase price. If we calculate the value of a common stock to be only slightly higher than its price, we're not interested in buying. We believe this margin-of-safety principle, so strongly emphasized by Ben Graham, to be the cornerstone of investment success.
Today's price levels, though, have materially eroded the "margin of safety" that Ben Graham identified as the cornerstone of intelligent investing.